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Yet Denver billionaire Philip Anschutz's attempt to grab control of No. 1 operator Regal Cinemas Inc., and a report that No. 2 Loews Cineplex Entertainment Corp. plans to close 72 Chicago-area theaters as a prelude to possible bankruptcy, are unlikely to fundamentally fix an industry where for many the closing credits are already rolling.

"You would need 'Jurassic Park 3' and 'Titanic 2' to come out together to save this industry near-term," said Bishop Cheen, an analyst at First Union Securities in Charlotte, N.C.

TOO MUCH, TOO FAST

Like many other industries, the theater industry underwent some consolidation in the 1990s.

But the survivors raced to outdo each other, spending lavishly to build far too many theaters with stadium seating and accouterments that drew crowds, but ruined their bottom lines. The operators failed to get out of enough leases for old, poorly performing theaters, and cannibalized each other. A weak 2000 box office didn't help, either.

Last year, several big theater operators, including Carmike Cinemas Inc., Edwards Theaters Circuit Inc., the parent of General Cinema Theaters Inc., and United Artists filed for bankruptcy protection, while Regal and Loews, among others, tottered near that precipice.

ANSCHUTZ BUYS INTO REGAL

Through his Anschutz Corp., Anschutz, who in 2000 grabbed control of the bankrupt United Artists Theatre Co., and Los Angeles-based Oaktree Capital Management have scooped up about $350 million of Regal's $1 billion of distressed bank loans.

Anschutz plan to swap the debt for equity in the Knoxville, Tenn.-based company, according to an article in The Wall Street Journal. Spokesmen for Anschutz Corp. and Oaktree were not available for comment.

Taking on Regal, which has more than 4,300 screens, would make Anschutz the biggest operator of U.S. movie screens, giving him nearly 6,000, or about 16 percent of a total 37,000. Regal is controlled by private equity firms Kohlberg Kravis Roberts & Co. and Hicks, Muse, Tate & Furst.

"It contributes to the consolidation of ownership and the eventual closing of uneconomic screens at that company," said Kevin Kuzio, a high-yield analyst at KDP Investment Advisors Inc. a Montpelier, Vt.-based high-yield research firm. "Any bad screen that comes off line is good for the industry."

Yet if Anschutz formally combined the companies it wouldn't do much for overall industry overcapacity, analysts said.

"While Anschutz is reportedly denying a consolidation theme, he is almost making a personal consolidation play," one analyst said. "His long-term goals probably don't stop at Regal. This is part of a larger strategy that probably plays itself out over the next two to three years."

LOEWS FACES DEADLINE

It is the next two to three weeks that are most critical for Loews. It is scheduled to report earnings by Jan. 15 and could throw at least its Canadian operations into bankruptcy.

Concern over Loews arose again after the Chicago Sun-Times, citing a local industry source, said the New York-based company, which runs 2,960 screens mostly in big metropolitan areas, plans to shut 20 percent of its Chicago-area screens.

Loews is out of compliance with a credit agreement with about 20 lenders, including Deutsche Bank AG, Credit Suisse First Boston , Bank of America and The Bank of New York. Its fourth waiver expires January 26.

Mindy Tucker, a Loews spokeswoman, would not comment directly on the story. "We look at closing our underperforming theaters across the nation on a continuing basis," she said. "We are in conversations with our banks and other stakeholders in our company to formulate a long-term financial plan."

This time may be different for those banks, though.

Loews has a $13.3 million payment due February 1 on $300 million of senior subordinated notes maturing in August 2008.

The bank lenders rank ahead of Loews' noteholders, and Kuzio, for one, expects the banks to block the note payment, just as they did for Carmike and Regal last year.

Cheen, on the other hand, said Loews might make that payment. Loews is unique in having a "deep pocket" behind it -- Sony Pictures Entertainment owns about 40 percent -- and Sony would not like a "black mark" on its own credit ratings, he said.

Loews has a partial out, though. In December, it amended the notes' terms to allow it to declare its Canadian, but not its U.S., operations bankrupt, without defaulting on the notes.

BANKRUPTCY THE BEST CURE

Analysts agree that though most of the costly new theater construction is done, and even if the biggest theater operators reinvent themselves, post-bankruptcy shakeouts are needed to darken enough screens.

"The general consensus is that 10,000 screens, perhaps more, need to come off line," said Steve Wilkinson, an associate director at credit rating agency Standard & Poor's. "The more large operators go into bankruptcy, the more screens will come off line, and that could accelerate improvement."

Cheen said it's possible some operators -- such as Bobby Cobb, who sold his 600-plus Cobb Theatres chain to Regal in 1997 -- might step in and buy some of the older theaters on the cheap, but he said, "there is a lot of wood to chop."

For the record, "Jurassic Park 3" is scheduled for release next summer. "Titanic" is unlikely to spawn a sequel.

Reuters/Variety